PENN Entertainment is optimistic about 2024 for both its properties and interactive segments even though fourth quarter revenue fell in comparison to the previous year.
The company’s President and CEO Jay Snowden believes “long-term shareholder value” can be created thanks to solid property level performance and further investment into its digital business.
Property revenue solid for PENN
Publishing its financial results, PENN declared a Q4 revenue of $1.4bn, down in comparison to Q4 2022’s $1.59bn. For the full year 2023, revenue stood at $6.36bn, a slight decline when compared to 2022’s $6.4bn.
Gaming revenue for the quarter stood at $1.04bn (Q4 2022: $1.27bn) and at $4.9bn for the full year (2022: $5.2bn).
Q4 net income came in at a loss of $358.8m (Q4 2022: $20.8m) and a $491.4m loss for the full year (2022: $221.7m).
Adjusted EBITDAR for the operator in Q4 was $112.5m (Q4 2022: $468.3m). For the full year, adjusted EBITDAR was $1.51bn (2022: $1.94bn).
Snowden commented: “PENN delivered another quarter of solid property level performance while continuing to invest in our high growth digital business, which we believe will create significant long-term shareholder value.”
Property revenue across PENN’s portfolio in Q4 came in at $1.37bn, a narrow drop YoY (Q4 2022: $1.38bn). For the full year, property revenue was $5.7bn, down slightly in comparison to the previous year (2022: $5.75bn).
“Property level performance this quarter benefitted from strong customer demand trends, mild weather, and our focus on customer experiences and operational excellence.”
PENN Entertainment President & CEO Jay Snowden
Per property region in the quarter, Northeast revenue led the way with $662.9m (Q4 2022: $667.1m), followed by Midwest with $290.6m (Q4 2022: $282m), South with $285.1m (Q4 2022: $304.4m) and West with $133.7m (Q4 2022: $130.7m).
Adjusted EBITDAR for properties in Q4 stood at $476.4m (Q4 2022: $487.1m) with a margin of 34.7 per cent. For 2023, property adjusted EBITDAR was $2.03bn (2022: $2.11bn).
“Property level performance this quarter benefitted from strong customer demand trends, mild weather, and our focus on customer experiences and operational excellence,” said Snowden.
“Notably, 10 properties spread across our portfolio achieved their highest ever fourth quarter revenue, demonstrating the benefits of our geographic diversity and unique omni-channel strategy.”
ESPN BET bolsters Hollywood icasino
Interactive revenue in Q4 came in at $31.5m, down significantly YoY (Q4 2022: $208m). However, for the full year, interactive revenue has improved to $718.8m (2022: $663.1m).
Adjusted EBITDAR for interactive during the quarter was a $333.8m loss (Q4 2022: $5.2m), while for 2023 as a whole, interactive adjusted EBITDAR was a $402.5m loss (Q4 2022: $74.9m loss).
During the quarter, PENN launched ESPN BET across several regulated US markets, which also bolstered its Hollywood-branded icasino business, resulting in a 280 per cent increase in monthly active users.
Snowden noted: “The November 14 launch of ESPN BET led to tremendous download volumes, conversion to over one million FTDs, and record handle, supported by our partners at ESPN and our proprietary technology.
“Our comprehensive strategic alliance with ESPN is providing exceptional value, leading to attractive customer acquisition costs and marketing efficiencies.
“Additionally, our Hollywood-branded icasino product within the ESPN BET app has started to benefit from cross-sell opportunities from ESPN BET, with solid revenue growth and record MAUs over the last several months.”
“our Hollywood-branded icasino product within the ESPN BET app has started to benefit from cross-sell opportunities from ESPN BET, with solid revenue growth and record MAUs over the last several months.”
PENN Entertainment President & CEO Jay Snowden
PENN has also expanded upon its diversity, equity and inclusion initiatives as part of its corporate social responsibility, being recognised for diversity by Newsweek and Forbes.
“We provided more than $7m in support to local charities and veterans-focused organisations and over $17m in economic development grants,” Snowden added.
“On the environmental side, we completed our inaugural scope three greenhouse gas inventory and established carbon abatement targets for 2024 and beyond.”
Looking ahead, PENN noted that it is expecting to introduce the ESPN BET brand in North Carolina as the market launches in March, as well as in New York before the 2024 NFL season, subject to regulatory approval following an agreement with Wynn Interactive to acquire its New York mobile sports wagering licenses.
In turn, this will expand the company’s reach and take its addressable online sports betting US population from 37 per cent to 46 per cent.
In addition, PENN will also be rebranding its retail sportsbook at Hollywood Casino at Greektown in Detroit, Michigan to ESPN BET, with the grand opening coinciding with the NFL Draft taking place in the city in April.
As of December 31, 2023, the company’s total liquidity was $2.1bn inclusive of $1.1bn in cash and cash equivalents, while net debt was $1.6bn.
